Chip Shortage Info

[Surf2snow1]

Had no idea where to post this…so went with a new thread. If it needs to move to another section, please help

I know there have been some comments/theories that part of the chip shortage is fueled by the automakers hoarding chips… this seems to mention that.

Feds Taking a Harder Stance on Chip Shortage, May Suspect Hoarding

The White House may use the Defense Production Act to start solving the logjam of semiconductor chips that's hitting car manufacturing and other industries so hard.

www.caranddriver.com

tldr;
The government is going to use the defense production act to get manufacturers to tell them how many chips they have on hand. How many they need. Why they order so many. All to see if hoarding is driving this shortage…but also to see if there is any way they can help kick the supply chain in to overdrive.

 

[Myfast70]

Just what we need, more government intrusion! The chips are going to laptops, computers of any type, tv's, gaming systems and the millions of other things that require them. I'm not sure that I would say manufacturers are hoarding them to inflate the cost of vehicles. I do the same thing with the parts I manufacturer, when I see there's a dip in supply I order extra so I can continue to make and deliver my products in a timely fashion. No products to deliver means no income, I go out of business. Maybe that makes me a hoarder too but I can still continue to sell & deliver as promised

 

[MtnRider]

I don't believe auto makers are hoarding chips it all. Delivering vehicles is profit to them and they cannot keep up with demand and are delivering vehicles minus a lot of features so that says to me they are not hoarding, they simply don't have the chips. And as far as placing orders for more then they need, people do that all the time that's just smart business.

Of course I have no data to back this, just seems if they had and were hoarding chips that they wouldn't have issues delivering vehicles.

Unless this issue is causing a degradation of our national defense capabilities the .gov needs to stay out of it. They are sticking there fingers in WAY too much of our business right now



.

 

[Surf2snow1]

Agreed. Not going to get political on it, but we all know the government has had a history of “helping”. Going to be interesting to see how this plays out. They’re calling this a crisis because Americans can’t buy more new cars. Seems very 1st world problem.

 

[mcarey]

Agreed. Not going to get political on it, but we all know the government has had a history of “helping”. Going to be interesting to see how this plays out. They’re calling this a crisis because Americans can’t buy more new cars. Seems very 1st world problem.

I think it's being called a crisis because it's impacting everything that uses chips.

That said, I don't see it as a total crisis just yet.

 

[jeffn]

this is ******** and the government is grasping at thin air because they can’t just fix this. They typically can’t fix anything on their own but this they definitely can’t fix. If manufacturers were hoarding chips, they would still be producing vehicles.

A lot of the components they are short on are used outside of the auto industry and I know of one very good example where a component is causing problems in a completely unrelated industry and it is a 0.09 cent resistor also popular in auto manufacturing. It is no secret everyone who relies on JIT and lean is buying ahead to secure component supply, that is not hoarding… that is protecting your business. I’m buying diesel fuel and cattle feed before I run out now, I’m buying toilet paper enough to make sure I don’t run out. Specific to auto chips, you have to unpack the hardware from the software to the finished assembly it all goes in before you can add it to a vehicle moving through production. There is a lot of customization at every step of the way which has fueled demand for FPGA chips across al industries and these suppliers have also been hit by covid labor shortages.

There is also a large and growing logistics challenge compounding the supply shortage. You can ship these components by air but keep in mind the volumes, which are large. And air freight from asia to the US is surprisingly affordable but not all of these components are made in asia. The Feds can enact all the provisions they have at their fingertips but it is all theater that wil l not make a lick of difference. It is all about looking like they are doing something instead of doing something.

It is going to get worse. Provinces in Southern China - where most of the manufacturing businesses are - announced electricity rationing a few days ago. 2 days on, 5 days off for electricity intensive manufacturing operations.

 

[Grayson]

Not making a political post but commenting on the article.

Certain companies are hoarding chips, these are the companies that have 15% or less reduction of production due to a shortage. With that being stated when it comes to a free market economy the term doesn't apply or represent what these companies have chose to do. Analysts presented data showing a future shortage of materials; they acted accordingly to maintain production.

Other factors are in play such as a 300x-400x increase in cargo shipments from China to the US. The logistics of the ports in California. If only the government would invest money in critical infrastructure I am sure the port situation could be resolved.

Behind the certain China is dishing out payback for Trump era economic policies that placed China at a disadvantage. The Chinese do not respect or feel threatened by the current administration. Again, not political just a statement of factual information.

Also China has roughly 85% of the worlds supply of rare earth metals, most of which are used in electronics.

 

[iflyskyhigh]

I guess we have to predicate this with “not a political statement”.

Which it’s not.

Just a statement of self evident truth that all should be able to see at this point.

The state f**ks up everything it touches.

Guaranteed if they get involved it will get worse.

 

[tnpete]

Sounds like I will be buying a horse and Buggy. Its going to be way faster then my truck being build. Sounds like were in for a long bumpy ride with China crap at its finest. Just Bid** time before it all fails.

 

[jeffn]

Behind the certain China is dishing out payback for Trump era economic policies that placed China at a disadvantage. The Chinese do not respect or feel threatened by the current administration. Again, not political just a statement of factual information.

The second part of your statement is likely true but the first half is more complicated. China-based manufacturing of semiconductors is 2-3 generations behind rest of world, their most advanced chips are 24nm while Taiwan (TSMC), S Korea (Samsung) and the USA are now doing 5 nm. No one would build advanced fabs in China knowing the Chinese would steal the tech, so SMIC and the 6 other native chip companies had to go it alone. The problem for them is that the companies that make the lithography, inspection, packaging and other advanced equipment are all US and EU-based companies and Trump put restrictions on semiconductor capital equipment sales to China. Those restrictions are still in place.

A lot of industrial and consumer good components are relatively mundane 90 and 120nm chips but even taking that into account China produces just 1 out of every 5 chips it needs for domestic manufacturing.

 

[elephantrider]

the defense production act, if it does come to that, will do nothing to speed up bringing new fabs online. that's a fixed lead time. no one is even far enough along to say we've gotten started.